17.48 On that note, we're going to shut up shop on the live blog for today. Many thanks for reading and commenting. Have a great weekend and we'll be back on Monday. In the meantime, follow all the latest news at Telegraph Finance.

17.39 Let's have a look at where the market finished in London today.The FTSE 100 has given up most of its gains to end the day up 3.63 points at 6,308.26, with sentiment hurt by the IMF's downbeat assessment of the US (see 16.50). Over what has been a volatile week, the benchmark index has lost 1.6pc, its fourth straight week of declines and its longest such losing streak since April 2012.

17.32 France is still standing firm in its refusal not to engage in free trade talks until its film industry is excluded. Paris, which is trying to shield French-language culture from Hollywood, has refused to join the 26 other EU governments that want talks to start in July, unless movies and digital media are left out of any deal.

EU ministers today sought to convince France that its prized 'cultural exception' could be safely included in the mandate for free trade talks with the United States after Paris insisted again it would not budge, AFP reports.

France "rejects this mandate," French Commerce Minister Nicole Bricq told her EU colleagues. "France will refuse any mandate which does not come with protection of the cultural sector and a clear and explicit exclusion of the audiovisual sector," Bricq told her colleagues in opening remarks.

Washington says no areas should be excluded and EU officials have repeatedly warned that any exceptions will only hand the US an early bargaining chip in what promise to be very tough negotiations.

At the same time, ministers are under great pressure to agree the guidelines on which the European Commission will negotiate the EU-US Transatlantic Trade and Investment Partnership (TTIP) so the talks can be formally launched at next week's G8 meeting.

French actress Audrey Tatou.

17.09 Speaking at a news conference following the release of the report, IMF managing director Christine Lagarde said that her organisation expects the US Federal Reserve will trim the amount of bonds it buys every month beginning next year.

"In terms of our hypothesis for next year's economic forecast, I think we have assumed a very slight decline" in monthly purchases made by the Fed, she said.

16.50 The International Monetary Fund has today published its annual health check of the American economy. In its report, the IMF urged America to repeal sweeping federal budget cuts that will be a severe drag on economic growth this year.

It forecast that economic growth would be a sluggish 1.pc this year, calculating that growth would be as much as 1.75 percentage points higher if not for a rush to cut the government's budget deficit.

The IMF cut its outlook for economic growth in 2014 to 2.7pc, below its 3pc forecast published in April. Washington enacted across-the-board federal government spending cuts, known as sequestration, in March because Congress could not agree on an alternative. It said:

The deficit reduction in 2013 has been excessively rapid and ill-designed. These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues, along the lines of the (U.S.) administration's budget proposal.

In an interview, Mrs Merkel said the high levels of youth unemployment in Europe represent a "huge crisis", comparing the eurozone's difficulties with post-Communist eastern Germany.

Speaking to the BBC, she said that when unemployment soared after the fall of the Berlin Wall, "many young people ... only had jobs because they moved to the south." Mrs Merkel said: "I think it's unfair that it is the young people especially who have to pay the bill for something they didn't do.

"But there's no way around it. We have to manufacture products or offer services in Europe that we can sell."

Her comments are the latest indication of Germany's concern that the prolonged economic crisis in southern Europe is putting the European project under strain. Germany is seeking to attract more migrants from crisis-hit countries to meet its own shortage of skilled workers.

In the interview, the German chancellor emphasised the need for economic reforms that would make Europe more competitive rather than insisting on limits to government spending.

16.15 Consumer confidence figures are out in the US and they show that sentiment retreated this month after reaching its highest point in nearly six years in May. The Thomson Reuters/University of Michigan June preliminary index of consumer sentiment fell to 82.7 from a final reading of 84.5 the prior month, a report showed. However, that is still the second-highest reading in the last eight months.

Paul Tucker is a giant loss for the Bank, albeit not a surprise. Obituaries for his Bank career have been written since Mark Carney came out of nowhere in November to be named Sir Mervyn King's successor. But his departure will be felt, nevertheless.

The deputy governor for financial stability, who was the bookies favourite for the top job, has been one of the most influential global figures over the thorny issue of fixing the world's broken banks.

His early work on forcing bondholders to bear losses, before taxpayers, set the standard for regulators worldwide. He has been a huge voice at the Financial Stability Board, where he is chair of the resolution committee and has the near-impossible job of turning too-big-to-fail banks into ones that can fail without state rescues.

His influence on Mark Carney, the younger man, can be seen in the Canadian's language. The term "escape velocity", meaning the point at which the economy has self-sustaining momentum, has been attributed to Carney since he used the phrase at Davos in January. But Tucker first coined the term almost two years ago.

The Bank of England

15.11 There have also been anti-capitalist protests further up the river, on the South Bank in London.

Here are two protesters dressed as 'fat-cats', and sat on 'The Isle of Shady, a pop-up tax haven set up by Enough Food for Everyone IF campaigner'

Photo: David Parry/PA Wire

15.05 G8 protesters have been out in Canary Wharf in London today. Stop G8 has been joined by UK Uncut, Occupy London, Fuel Poverty Power and the Greater London Pensioners Association, all apparently under a banner saying "They owe us".

Around 200 protesters have assembled in the heart of the financial district. Activists have also erected and scaled tripods, bamboo structures designed to prevent any attempts by police to clear the area by force.

The group's plan is to hold a mass assembly in the heart of the financial district to discuss alternatives to the current capitalist system that they blame for creating the economic and climate crises.

Katherine Marshall of They Owe Us said:

We're here because the businesses and banks of Canary Wharf are responsible for causing the current economic crisis and they are financing and profiting from the climate crisis. Their decisions are causing poverty and suffering here in Tower Hamlets, across the UK and around the world. Normal people are being made to pay the price for their greed and recklessness.

And here they are:

Anti capitalist protester demonstrate in Canary Wharf

Anti-G8 demonstrators hold up a banner, in the Canary Wharf

14.51 I also mentioned earlier (08.06) that China failed to sell all of the debt offered at an auction for the first time in 23 months.

A front-page editorial on Friday in China Securities Journal - an arm of the regulatory authorities - warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote.

The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.

It also warned that total credit in Chinese financial system may have reached 221pc of GDP, jumping almost eightfold over the last decade. Companies will have to fork out $1 trillion in interest payments alone this year. “Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output,” it said.

There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Bank Everbright missed an interbank payment last week in a technical default.

14.46 You may remember this morning that Airbus carried out the maiden flight of its A350 today over Toulouse (see 08.49).

Well now you can watch it.

14.32 Over in the US it's been a relatively flat start to trading for the Dow Jones Industrial Average. After rallying 1.2pc on Thursday, the index has dipped about 0.1pc today.

14.19 A quick look at European markets before the US opens. The FTSE 100 is holding steady ahead of the closely-watched start of trading in the US, which kicks off in about 10 minutes time and is likely to dictate the direction of trade in Europe. London's benchmark index is up 0.2pc, while the Cac 40 in France is 0.4pc higher and the Dax in Germany is up 0.6pc.

13.55 Simon Hayes at Barclays makes the point that Tucker's replacement will fill the role of deputy governor for financial stability, which includes a seat on the rate-setting Monetary Policy Committee.

Therefore, he argues, Tucker's departure could lead to a change in monetary policy outlook.

The deputy governorship is a Crown appointment, and is therefore in the hands of the government, and in choosing Mark Carney as the next Bank of England governor, Chancellor Osborne revealed a preference for “monetary activists”.

It is therefore quite possible that Mr Tucker’s replacement will be more inclined to support a monetary expansion. That said ... there remain some serious reservations on the committee about the wisdom of more QE at this juncture, and if the economic outlook continues to brighten, the MPC seems likely to conclude that no more support is needed.

Moreover, arguably the biggest challenge facing the BoE over the next few years is to ensure that monetary policy and macro-prudential policy are appropriately configured and joined up.

The new deputy governor will be pivotal in this process, and the ability to take the fledgling Financial Policy Committee forward and to engineer an effective link-up with the MPC is probably a more important selection criterion than their view on the current monetary stance.

13.38 More reaction. David Buik, market commentator at Panmure Gordon, is also not surprised by his departure and says he will be a "huge" loss to the Bank.

Paul Tucker’s decision to leave the Bank of England...cannot come as a surprise to anyone connected with the world of finance, banking or economic activity.

He will be a huge loss as a Central banker having been a colossus in terms of radical thinking on monetary policy as well as orchestrating quite brilliantly with the minimum of fuss the implementation of the required level of liquidity needed to keep the banking sector afloat in 2008.

He came strongly to the fore at the discount office, when he worked closely with Robin Leigh-Pemberton and the late and much admired Sir Edward George, Sir Mervyn King’s predecessor as Governor

...

There was absolutely no way he could have stayed on, after Mark Carney was appointed Governor to replace Sir Mervyn King having been unfairly rubbished by the Treasury Select Committee over LIBOR regulation, which was never part of Tucker’s watch, despite an unfortunate and unsolicited phone call with Bob Diamond. I think Paul has behaved with the utmost integrity by remaining in situ until Carney is settled.

13.15 The Treasury said the process to appoint Mr Tucker's successor had not yet started, but would be set out "in due course".

All governor and deputy governor appointments at the Bank are formally made by the Queen, on recommendation of the Prime Minister and Mr Osborne, although Mr Carney is expected to be closely involved in the process.

13.07Tom Vosa, an economist at National Australia Bank, has raised the question of whether or not there will be further departures from the Bank following today's announcement.

It's clearly earlier than planned and really the question is whether we see other departures coming forward.

The interesting bit will be whether the replacement is an internal or external candidate which will probably give you some clues as to how Carney expects to position the bank under his governorship.

12.49Howard Archer at IHS Global Insight said on Tucker's departure:

Absolutely no surprise at all – it always seemed a question of when would Paul Tucker leave rather than if after he lost out to Mark Carney for the governorship.

Paul Tucker had clearly waited for a long time to be the successor to Sir Mervyn King. He was also the favourite to get the governorship, which must have made it an even more of a bitter disappointment when he lost out. It would not have been easy for him to stay and serve under Carney.

His turn was due to end in February 2014, but obviously he could have sought to be reappointed, which he highly likely would have been.

I suspect Paul would have the pick of a number of positions. He is generally very highly regarded in the City.

Paul Tucker has done a very good job at the Bank of England but his departure is not a surprise after he was overlooked for the Governor’s position. He is well respected in global circles and may take on a role overseas. It is very difficult to speculate.

The BoE is in a period of wholesale change at senior levels, with the Governor and two Deputy Governors leaving, plus the imminent appointment of a COO.

It is clear that one of the aims is to change the culture of the Bank which suggests that we may get some more appointments from outside. Even so, one suspects that there will be a combination of outside and inside appointments to promote a degree of continuity within the Bank.

12.35 Back in the stock market, London property developer Great Portland Estates has risen 4.2pc, courtesy of an upgrade to "buy" from "neutral" at UBS. Analysts at the bank said:Recent acquisitions should deliver short-term income streams which will boost earnings but these also form the longer-term development pipeline. Management sees more opportunities to exploit within, rather than outside, its portfolio and has facilities of nearly £300m to fund it, more than enough for the next two years.

Already deputy governor for financial stability, he ticked the right boxes. A Bank lifer, he knows the institution inside out, has worked in monetary policy and banking supervision as well as financial stability, and helped co-ordinate the global response to the financial crisis.

Before the scandal, Paddy Power had Mr Tucker 4/5-on favourite. Then came Libor, with emails suggesting an all-too-cosy relationship between Mr Tucker and Bob Diamond, the disgraced former Barclays boss (“You’ve been an absolute brick,” Mr Tucker wrote), and the admission he had failed to recognise rate-rigging right under his nose.

“This does not look good, Mr Tucker,” Andrew Tyrie, chairman of the Treasury Select Committee, noted at the time.

He tumbled to 9/2 and fifth favourite.

12.01 Paul Tucker has served as one of the Bank's deputy governors since 2009.

He has been described as a “cerebral Winnie the Pooh” by one commentator, and “complex”, “demanding” and “ambitious” by another senior colleague, Tucker is seen as a "middle of the road" voter at the MPC who has rarely deviated from the pack.

He has been closely involved with financial stability at the Bank, serving as deputy director for financial stability between January 1999 and May 2002.

In March 2009, he was appointed deputy governor of the bank, and he is currently a member of the G20 Financial Stability Board's Steering Committee.

Former Labour Chancellor Alistair Darling also described Mr Tucker as one of the "good people in the Bank," when talking of the strains between himself and Sir Mervyn King.

The Bank of England

11.46Chancellor George Osborne wrote a letter to Tucker accepting his resignation. Here it is:

And here is Tucker's letter in response:

11.36 Lots of Twitter reaction to the news of Tucker's depature. Here is some of it.

&lt;noframe&gt;Twitter: James Quinn - I wonder if BoE's Paul Tucker has called Bob Diamond to ask for advice post-stepping down from a big banking job?&lt;/noframe&gt;

&lt;noframe&gt;Twitter: matt scuffham - Tucker to leave Bank of England - how long before people start making the RBS connections?&lt;/noframe&gt;

&lt;noframe&gt;Twitter: Shaun Richards - Don't feel too sorry for Paul Tucker as he will leave the Bank of England with a pension fund valued at &amp;#163;5.71 million! &lt;a href="http://search.twitter.com/search?q=bankocracy" target="_blank"&gt;#bankocracy&lt;/a&gt;&lt;/noframe&gt;

11.27Tucker has been at the central bank for more than 30 years, having joined in 1980, soon after he graduated from Cambridge Uni.

His current five year term was not due to finish until February 2014.

Many had thought Tucker was a "nailed-on certainty" to take over from Sir Mervyn at the top spot, depsite his involvement in the Libor scandal.

Bob Diamond, the former chief executive of Barclays, made public an ambiguous telephone conversation in which he claimed that Mr Tucker had suggested that Barclays should lower its Libor submissions.

Giving evidence to the Treasury Select Committee, Mr Tucker denied that this was the case.

However, he lost out to Mark Carney, currently governor at the Bank of Canada. Carney is the first non-British Governor in the Bank of England's 318 year history.

Mark Carney will be the new Bank of England governor

11.19 There are also statements from outgoing governor Sir Mervyn King:

I have been privileged to have had Paul Tucker as a close colleague and Deputy during my time at the Bank and as Governor. Paul’s contribution to the Bank, to monetary policy, and more generally to public policy, both in the UK and in the world as a whole has been enormous.

Paul has more to contribute in the future and I am very pleased that he will support my successor, Mark Carney, as he settles into the Bank.

And incoming governor Mark Carney

It has been an enormous privilege to work closely with Paul at the FSB over the past several years. Paul has contributed immeasurably to a series of critical financial reforms, including policies to end Too-Big-to-Fail and to build more resilient derivative and funding markets.

I wish Paul every success in the next phase of his career and look forward to maintaining our close dialogue on how to build a more resilient financial system that more effectively serves the needs of the real economy.

11.15 A statement on the Bank of England website, says Paul Tucker, deputy governor at the central bank, is likely to leave in the autumn after he has "provided support" to the new governor Mark Carney.

The bank said that when Tucker leaves he will "spend a period of time in academia in the United States".

Tucker said:

It has been an extraordinary honour to serve at the Bank of England over the past thirty years. I am very proud that, through the Bank and the wider central banking community, I have been able to make a contribution to monetary and financial stability.

I will continue to do so in the coming months. I am looking forward to supporting Mark Carney as he arrives at the Bank.

11.08Breaking: Paul Tucker is to leave the Bank of England

11.06 Ireland will be happy if reports in the country are right that it has won a delay to its bank stress tests.

According to the Irish Times, banks in the country will undergo the tests, which look at the ability of the banks to cope with crisis, in 2014 and not before its £85bn bailout programme concludes at the end of this year, as had been originally planned.

The paper quotes Ireland's finance minister Michael Noonan as saying:

We have reached agreement with our European partners and the IMF that our next round of bank stress testing will be in close proximity, but slightly in advance of the general round of stress testing in Europe. So it will be in the first half of 2014 rather than this autumn.

This will come as a relief to the Irish-owned banks who had called for the next set of stress tests to take place around the same time as the EU-wide ones. Bank bosses say they could be at a disadvantage to their European peers if Ireland was forced to go months early just to satisfy a timetable set down under the terms of the bailout agreement.

Noonan added that he did not expect the tests to result in the Irish banks requiring extra capital to bolster their balance sheets and to meet regulatory requirements.

At present, all our calculations would suggest that no future capital is required. We are well within the margins at present.

Ireland's finance minister Michael Noonan.

10.52 Over to Spain where there are some painful numbers to digest.

Spain's public debt shot to a record high in the first quarter of this year, the Bank of Spain said Friday, despite Prime Minister Mariano Rajoy's hotly protested austerity squeeze.

Spain's public debt surged to 88.2pc of annual economic output, up by 15.2 percentage points from a year earlier, the central bank said.

Meanwhile, S&P has confirmed the country's sovereign debt rating at just above junk bond status today, predicting a weak economic recovery in 2014 but sounding the alarm on high foreign debt levels.

The rating was given a negative outlook, meaning it could be lowered to junk bond status in the next 12-18 months if Spanish economic reforms falter, eurozone support fails to satisfy investors or government debt runs out of control.

S&P said:

Positively, we believe that the Spanish economy is recalibrating.

The focus appears to be moving toward external demand as strong goods and services exports have shown since 2010.

Spain's competitiveness had also improved, it said, with labour costs sliding by 10 percent since mid-2009.

But external debt posed a risk, it said, with net international liabilities hovering just below 100 percent of annual economic output.

10.36Capital Economics has put out a note responding to the construction figures and says they are "better than they look".

Economist Vicky Redwood said:

On the face of it, they tentatively suggest that construction could help the economic recovery in the second quarter – even if that is just by construction output no longer falling.

...

There is probably still scope for a bit of a weather-related rebound over the rest of the quarter, as the sector makes up for the disruption caused by the poor weather in the first quarter.

...

Looking further ahead, construction has scope for a significant bounce-back at some point, given its near 20% fall since its pre-crisis peak. That said, given the continued squeeze on credit and public sector housebuilding, any recovery could be slow.

Today's figures are also supported by recent PMI data which edged above the crucial 50 mark in May for the first time in seven months. A level above 50 indicates an expansion.

Accordingly, these data offer some hope that construction will provide a positive contribution to GDP in Q2.

10.18 Some reaction to those construction figures.

Howard Archer, economist at IHS global, says the slowdown in the decline could be a big boost for Britain's economic recovery.

There were hints in the data that the underlying performance of the construction sector may finally be starting to improve.

There now looks to be a very decent chance that construction output could expand in the second quarter, and help growth to strengthen and broaden from the first quarter when GDP rose 0.3pc quarter-on-quarter

Even if construction output was essentially stable in the second quarter, that would help matters given that the sector was once again a significant drag on growth in the first quarter after holding back the economy appreciably over 2012.

However, he warned:

The construction sector is still being hit by a dearth of public sector projects amid tightened spending, while the extended weakness of the economy has meant that private commercial activity remains weak and may take some time to pick up significantly.

10.15 But there is some good news for the UK - the annual decline in UK construction output has slowed sharply.

British construction output posted the smallest annual fall in almost a year and a half in April, raising hopes that construction might contribute to economic growth in the second quarter.

Output dropped 1.1pc compared with April a year ago - the slowest fall since November 2011, the Office for National Statistics said today.

On the month, output fell 6.5pc - the first decrease since January. However, new work in private housing rose 3.6pc.

While the construction sector only accounts for 6.8pc of total UK output, the extent of its weakness meant that it knocked 0.6 percentage points off GDP growth in 2012 which was limited to 0.3ps.

Construction output then knocked a further 0.2 percentage points off GDP growth in the first quarter of 2013.

A 37 storey skyscraper under construction, designed by architect Rafael Viño, in London

The decision will be a huge blow to Bombardier, the Derby-based train-maker – one of three major employers in the city.

However, it will take a further 10 days before the contract can be formally awarded to the German company because of a legal requirement for a pause – known as the Alcatel standstill period.

But the announcement triggered an angry response from Frances O’Grady, the TUC General Secretary.

"This will be a death blow to Derby’s economy,” she said. “The Bombardier workforce is loyal committed and highly productive. It is the exact opposite of the modern industrial policy that this country needs.”

The long-standing row over the award of the contract has overshadowed the project to supply 1,140 new carriages for the Thameslink line, one of the country’s busiest commuter routes, which runs north to south through London.

Carriages at train manufacturing company Bombardier in Derby

09.41 With the FTSE 100 putting on 0.4pc in early trade, it's a calm morning on the markets. There's little corporate news around to occupy traders, but Citigroup strategists have released a wide-ranging note on the equities:Despite the recent pull-back, European equities have returned c.25-30pc over the past year. We stay bullish and expect a further 20pc+ return to end-2014. We stay buyers of dips. Firming US economic growth, less bad Euro Area growth, a trough in European earnings, modest absolute and cheap relative equity valuation, a record wide debt/equity funding gap, a robust corporate sector and signs that capital allocators are being 'forced' back to equities support our bull thesis.

09.32 The head of Europe's bailout fund says the region should eventually aim to do without help from the International Monetary Fund.

Reuters reports:

Klaus Regling's comments in Friday's edition of Germany's daily Frankfurter Allgemeine Zeitung add to recent hints from other European policymakers that the bloc should aim to handle future emergencies on its own.

Over the past three years, the European Union's executive Commission, the European Central Bank and IMF have worked together to manage the bailouts of Greece and three others. Tensions have recently risen, notably after the IMF voiced its concerns over the European approach to the Greek rescue.

Regling was quoted as saying the IMF's expertise is still needed "in the short and medium term."

Klaus Regling

09.20 If you are over in Canary Wharf at all today then watch out for StopG8 who are planning a demonstration there today.

The anti-capitalist movement is being joined by activists from UK Uncut, OccupyLondon, FuelPovertyPower and the GreaterLondonPensionersAssociation, all apparently under a banner saying "We don't owe them; they owe us."

There's also a G8 Innovation Conference being held in London today bringing together a raft of entrepreneurs and thought leaders ahead of the big meetings in Northern Ireland on Monday and Tuesday.

Canary Wharf, whose glass skyscrapers housing offices and shops now dominate the formerly derelict dock area in east London, is a privately-owned estate and security is usually tight.

HSBC, Morgan Stanley MS.N and Credit Suisse are among companies who have offices there.

If you are there and see the protests, tweet me pictures of them - @becclancy

Canary Wharf

08.59 On the FTSE 250 - up 1.1pc at 1,3835 - engineering group Vesuvius is a laggard and has dipped 0.4pc, despite the strong performance of the wider index. A profit warning from Chinese peer Sinoref is weighing on the shares, and Oriel Securities analyst Harry Philips has said: One of Vesuvius’s major competitors in the Chinese steel flow control market, Sinoref, warned late yesterday with its price ending 12pc lower.

China accounts for 20pc of Vesuvius’s steel flow control sales and 10pc of its total steel related sales which is £100m or 7pc of group sales. So important but not significant.

08.49 The plane geek in me is very excited about the Paris Airshow next week but before that kicks off Airbus is set for the maiden flights of its A350 today.

The aircraft is lighter and can carry more fuel.

The first sortie of Europe's newest passenger plane follows seven years of development costing an estimated $15 billion.

Airbus hopes its first aircraft built mainly from lightweight carbon composites will reduce US rival Boeing's lead in the market for long-haul, wide-bodied jets where it offers the 787 Dreamliner which uses similar technology.

All being well, it is hoped that the Toulouse launch will prompt a raft of orders at next week's Paris Airshow.

The Airbus A350

08.29 Will the French really block the biggest free trade deal in history for "cultural" reasons?

But this morning the French are still manning the barricades and insisting that no deal will go ahead until films and digital media are ring fenced.

The French Ambassador to London, Bernard Emie, has told Radio 4 that French films must be protected from Stephen Spielberg and the rest of Hollywood. "These people are not French, they are Anglo Saxon," he said.

He dismissed the view that a good industry would survive any free trade agreement: "It is extremely important to have subsidies and support," he said. EU trade ministers will meet today to find an agreement.

08.12 Helped by a strong performance from Wall Street last night, which saw the Dow Jones Industrial Average rise 1.2pc and the S&P 500 gain 1.5pc, the FTSE 100 had advanced 0.4pc in early trade.A firm close on Japan's Nikkei 225, which has been volatile in recent weeks, that saw the index finish up 1.9pc has also calmed nerves in London.

08.06 Not such good news in China. Its Finance Ministry has failed to sell all of the debt offered at an auction for the first time in 23 months.

The ministry sold 9.53 billion yuan (£988m) of 273-day bills, less than the 15 billion yuan target, according to two traders at finance companies that participate in the auctions.

Bloomberg reports:

Agricultural Development Bank of China Co. raised 11.51 billion yuan in a sale of six-month bills last week, less than its 20 billion yuan goal. The seven-day repurchase rate, which measures interbank funding availability, has more than doubled in the past month as banks hoard money to meet quarter- end capital requirements and capital inflows ease.

"The cash crunch is curbing demand for bonds,” said ChenYing, a fixed-income analyst at Sealand Securities Co. in Shenzhen. “The crunch may persist if the central bank doesn’t come out to inject more capital into the financial system. If it lasts longer, it may affect issuance of both government and corporate bonds.”

The average yield at today’s bill sale was 3.76pc, said the traders, who asked not to be identified. That compares with a 3.14pc rate yesterday for similar-maturity existing securities, according to data compiled by Chinabond, the nation’s biggest debt-clearing house. The ministry’s last failed auction was a sale of 182-day bills in July 2011.

07.50 Aside from the US, markets in Japan were also boosted after the cabinet rubber-stamped a set of measures to boost economic growth that so far have failed to impress markets and made Prime Minister Shinzo Abe promise to take more steps after next month's upper house elections.

The growth strategy is a part of Abe's economic revival plan that also includes hyper-easy monetary policy and big government spending.

The first two "arrows" - huge government spending and a flood of easy money from the central bank, sent the yen plunging and the stock market soaring.

Markets were also disappointment over the absence of such steps as corporate tax cuts, labour market and farming sector liberalisation accelerated the retreat in Japanese stocks, which dived into a bearish territory this week.

In response, the government included a proposal to offer tax breaks to companies investing in new equipment and facilities.

Abe said in a video message:

The growth strategy decided today will be the starting point.

I will ensure political stability and in the autumn I will launch the second round of the Growth Strategy.

The cabinet approval of a broad array of steps and targets hammered out by government and expert panels comes at a critical point in Abe's six-month push to pull the world's third-largest economy out of deflation and bring back sustained growth.

In the article it stated that any bond tapering program from the Fed would be gradual in nature, and that rates would remain low for quite some time to come, a point he expected to be reinforced at next week’s Fed meeting.

Mr Hewson said:

It does seem quite incredible that there are some in the market who needed to be reminded of this and actually believed that the Fed would consider acting in any other fashion than a gradual adjustment program when conditions merited it. Nevertheless, given yesterday’s late market reaction, particularly in the bond market, this would appear to be the case.

....

Even so it will take a significant reversal of sentiment to prevent a fourth successive week of losses for Europe’s markets.

US Fed chairman Ben Bernanke

07.25 European markets look set to open higher this morning at the end of a turbulent week in the wake of a strong finish on Wall Street last night, and all because of a two good bits of US data.

The DowJones closed up 1.21pc on Thursday, the S&P 500 was up 1.5pc and the Nasdaq was up 1.3pc

Asian markets have followed suit this morning with the Nikkei helped by the fact the Japanese cabinet endorsed the latest steps in the so-called “third arrow” of Abenomics.

The Nikkei225 closed up 1.94pc while the Hang b in Hong Kong was up 0.8pc shortly before close.

The bank’s chairman, who on Wednesday presided over the premature resignation of Stephen Hester, has asked Anna Mann to find a successor to run the state-backed bank.

Her involvement suggests that neither Sir Philip nor Chancellor George Osborne had identified a successor to Mr Hester in advance, adding to speculation that his surprise departure was sparked by a sudden disagreement.

Ms Mann, of MWM Consulting, is one of the City’s most influential and best connected recruiters, having helped place Sir Richard Broadbent as chairman of Tesco and John McFarlane as chairman of Aviva.

Sir Philip has given her a list of the qualities that the ideal candidate would have to replace Mr Hester, who is due to leave the bank by the end of December. These include:

• an excellent candidate who is skilled enough for the job in hand;

• ability to manage the business in a steady state, with the emphasis on management rather than restructuring;

• ability to develop and maintain strong and constructive relationships with all stakeholders;

• ability and willingness to endure in the job and deliver the privatisation strategy.